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How Can The Boe Justify Any More Qe, Now We Have A Recovereh?


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Guest Daddy Bear
The stated goal of the BoE is to keep inflation at ~2%. They pumped £125 billion in over a few months, and still the country went from a small inflation, and into small deflation. And it is going further into deflation as each month goes by. As are all the other major economies.

So the BoE needs at least another £150 billion in QE over the next few months. QE to fund fiscal stimulus is the ideal way because the fiscal spending can be spent broadly into the economy. Whereas monetary stimulus can go to just a few people and sit on balance sheets.

I'd personally push the next wave to £200 billion.

They will need about £2 Trillion over the next two years.

It will happen

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The stated goal of the BoE is to keep inflation at ~2%. They pumped £125 billion in over a few months, and still the country went from a small inflation, and into small deflation. And it is going further into deflation as each month goes by. As are all the other major economies.

So the BoE needs at least another £150 billion in QE over the next few months. QE to fund fiscal stimulus is the ideal way because the fiscal spending can be spent broadly into the economy. Whereas monetary stimulus can go to just a few people and sit on balance sheets.

I'd personally push the next wave to £200 billion.

small theft

big theft

whats the moral difference

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The stated goal of the BoE is to keep inflation at ~2%. They pumped £125 billion in over a few months, and still the country went from a small inflation, and into small deflation. And it is going further into deflation as each month goes by. As are all the other major economies.

So the BoE needs at least another £150 billion in QE over the next few months. QE to fund fiscal stimulus is the ideal way because the fiscal spending can be spent broadly into the economy. Whereas monetary stimulus can go to just a few people and sit on balance sheets.

I'd personally push the next wave to £200 billion.

What about the warning from the IMF? Downgrade anyone?

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Last week in the Home Co. UK HPI 14th July 2009 it said:

......in an unprecedented campaign the Bank of England deputy governor Charlie Bean will commence a tour of the UK to explain why quantitative

easing (creating money to buy government debt) is a good idea to ‘get the UK spending’. The tour follows the BoE’s publication of a pamphlet explaining

quantitative easing – why it is needed, how it is expected to work and how the MPC are monitoring its effectiveness on the UK economy.

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Last week in the Home Co. UK HPI 14th July 2009 it said:

perhaps mr bean should go the debt counselling desk at the Citizens' Advice and find out just how many are over-spending and drowning in debt, not just on holidays, cars, new kitchens, but on ever-rising taxes and cost of living, energy bills etc

they are a joke, they are asking people who are on the edge or beyond in debt to commit further financial suicide "to keep britain going" - and these officials are drawing huge salaries for these pearls of wisdom and are our leaders????!? :blink:

Edited by loginandtonic
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Just heard an article on Auntie Pravda Radio 4 - suggesting a new phase of QE is a done deal - more money needs to be printed, etc. But HOW can they justify it against the backdrop of green shoots. And what will the consequences be?

You see debt is wealth, if we can borrow even more money from the future we can create growth to guarantee future generations live in luxury.

This is very simple and easy to understand.

I mean what can possible go wrong.

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please tell me its a spoof

Unfortunatley not, NO. After all this time someone has written the rules of banking economics. Its a combination of imaginative drivel and fact.

The reality is we either continue to pile on the debt and carry on regardless or we stop and have an economic implosion the like of which you don't want to spend much time thinking about.

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Last week in the Home Co. UK HPI 14th July 2009 it said:
......in an unprecedented campaign the Bank of England deputy governor Charlie Bean will commence a tour of the UK to explain why quantitative easing (creating money to buy government debt) is a good idea to ‘get the UK spending’. The tour follows the BoE’s publication of a pamphlet explaining quantitative easing – why it is needed, how it is expected to work and how the MPC are monitoring its effectiveness on the UK economy.

Yes, they would hardly bother telling everyone why QE is a good idea if they weren't going to repeat the exercise. However, Charlie Bean also said that it may take up to 9 months before the full effects of QE are known.

So my guess is they will do more in stages, keeping a watchful eye on what effect the first wave is having and being prepared to stop if necessary.

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they will print money to pay off public servants next, as you can see tax revenues are collapsing so the Bank will be expected to print more, that is when we get into full on debasement of the currency Zimbabwe style. I have predicted this exact course, they said it was only going to be 75bn, now it's 150bn, the figures get ever larger as they disappear down their own hole and the demented officials in charge think printing more money will work.

it is the course of all failed states down the ages, the propaganda about QE is ridiculous. They cannot create or print money or wealth, it doesn't work and has huge negative effects... if it did work, we would never need to tax or work. they cannot create wealth period no matter what fancy names or brochures they produce!

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Yes, they would hardly bother telling everyone why QE is a good idea if they weren't going to repeat the exercise. However, Charlie Bean also said that it may take up to 9 months before the full effects of QE are known.

So my guess is they will do more in stages, keeping a watchful eye on what effect the first wave is having and being prepared to stop if necessary.

are you crazy? they will never stop/ 75bn, 150bn, next stop 1 trillion, they cannot print their way out of this and as they try to they dig themselves into a deeper hole. this is locked in, predictable behaviour by panicing officials and the course followed by many failed states throughout the ages.

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What about the warning from the IMF? Downgrade anyone?

True and that could have a negative impact. But I believe if they are ready to monetize 100% of the budget deficit, then they don't really need the bond market to fund the national government.

At an extreme level the national debt not held by the BoE is about £600 billion. And not all of them would sell, like many hold amounts just to diversify currency, or for regulatory reasons. So maybe at most £300 billion would sell if it was very worth it to them.

But if the BoE was willing to monetize that too, then they would be bulletproof on the bond ratings.

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Explained? I gave up upon reading this shameless misdirection.

The MPC’s decision to inject money directly into the economy does not involve printing more banknotes. Instead, the Bank buys assets from private sector institutions – that could be insurance companies, pension funds, banks or non-financial firms – and credits the seller’s bank account.

Oh, so they're not just printing money. They buy the stuff. That's okay then.

But they stuff it up themsleves later. Probably hoping people have stopped reading already.

A direct cash injection. The Bank creates new money to buy assets from private sector institutions.

So it's all coming from the same thin air afterall.

How many people does this sort of low level deception work on?

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Explained? I gave up upon reading this shameless misdirection.

Oh, so they're not just printing money. They buy the stuff. That's okay then.

But they stuff it up themsleves later. Probably hoping people have stopped reading already.

So it's all coming from the same thin air afterall.

How many people does this sort of low level deception work on?

well , I can think of at least two...one has one eye and the other has enlarged odd coloured eyebrows.

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they will print money to pay off public servants next, as you can see tax revenues are collapsing so the Bank will be expected to print more, that is when we get into full on debasement of the currency Zimbabwe style. I have predicted this exact course, they said it was only going to be 75bn, now it's 150bn, the figures get ever larger as they disappear down their own hole and the demented officials in charge think printing more money will work.

it is the course of all failed states down the ages, the propaganda about QE is ridiculous. They cannot create or print money or wealth, it doesn't work and has huge negative effects... if it did work, we would never need to tax or work. they cannot create wealth period no matter what fancy names or brochures they produce!

lucky for us, the US is in a much worse state. It will happen to them first, but whenthat happens, who is going to buy our bonds anyway?

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We had the IMF's Damning Verdict with regards the net cost of the banking crisis to the UK , and recently the IMF say UK can't afford another fiscal rescue

Back in March a BOE official warned Darling "Don't try to Stop the Housing Crash" saying:

........‘There is a danger that policy intervention in the housing market stops these sorts adjustments from happening.

‘We have to be very careful with policy intervention that we don’t actually make it worse.’

Property prices are still 40 per cent above their historic averages, suggesting further declines are unavoidable, the Organisation for Economic Co-operation and Development said earlier this month.

Analyst Vicky Redwood of Capital Economics said: ‘The housing market correction has to happen and we may as well get it over with sooner rather than later.

‘It is obviously in the government’s interests to try to delay any adjustment in house prices and get them to fall at a slower pace for political reasons.’

Treasury Committee chairman John McFall said: ‘Policy interventions have to accept there has to be a floor in the market. There can be no artificial stimulus.’....

However, by May 2009 we had :

The Government must consider pumping more cash into struggling British banks and conceivably nationalise more of them, or consign itself to years of insipid growth, the Bank of England Governor has warned

Mervyn King said although banks' survival had been assured by recent bail-outs, they would not start lending freely unless more capital was pumped into their balance sheets.

Mr King said: "There is a big difference in practice between the levels of capital banks need to be stabilised... and those required to persuade banks to exhibit normal levels of risk-aversion. How big that gap is is impossible to say... but it looks as if it will be quite big.

Reuters on the 2nd July in an article titled Lenders Expect to Extend More Credit said:

...but lenders expected spreads on new mortgage lending to remain wide, meaning borrowers would not see the full benefit of record low interest rates. And spreads on corporate lending were expected to widen further.

"While there are some encouraging signs in the credit conditions survey, the UK is certainly not out of the woods yet," said Colin Ellis, an economist at Daiwa.

"As long as credit scores continue to tighten, that will make it harder for households to get funding, which is likely to restrict activity, particularly in the housing market, for some time.".....

Economists are split on whether the central bank will extend its QE programme but all agree that credit conditions will be key to that decision.

Although mortgage approvals have picked up from record lows hit last year, hard indicators of lending remain weak. .....

However, while lenders expected demand for loans from small businesses to pick up, they did not expect any increase in demand for mortgages

There was also an expectation that default rates would continue to rise and little appetite to cut spreads -- the margin over the Bank rate that lenders charge for credit......

There was also an article this week Mortgages Will Get More Expensive that said:

Lenders have quashed expectations of a return to the days of high loan to value (LTV) mortgages by warning that funding restraints are ongoing and unlikely to ease in the near future.

Dispelling any hopes that there is a glut of cheap credit set to come on stream which could boost the housing market, the Council of Mortgage Lenders (CML) said its members' ability to extend more credit was 'constrained for the foreseeable future.'

A spokesman for the CML - whose members cover 98% of all residential mortgage lending in the UK - said: 'The underlying problem is that we don't have access to the range and type of funding we used to have.

'Government intervention (namely through lending agreements with semi-nationalised banks) has improved the situation but the constraints on lenders are real.'

So what is it to be? Is the BOE going to pump cash into the propety market keeping property values artificially high? Or will it allow property to fall to the level it needs to fall to return to sensible sustainable lending ?

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they will print money to pay off public servants next, as you can see tax revenues are collapsing so the Bank will be expected to print more, that is when we get into full on debasement of the currency Zimbabwe style. I have predicted this exact course, they said it was only going to be 75bn, now it's 150bn, the figures get ever larger as they disappear down their own hole and the demented officials in charge think printing more money will work.

it is the course of all failed states down the ages, the propaganda about QE is ridiculous. They cannot create or print money or wealth, it doesn't work and has huge negative effects... if it did work, we would never need to tax or work. they cannot create wealth period no matter what fancy names or brochures they produce!

Or the Tories get in 10 months time on a cost cutting mandate, QE is wound down, public spending savagly cut, sterling unexpectedly rallies and hyperinflation is saved for another day....

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Friday, 24th July 2009 Darling to meet with banks

Chancellor Alistair Darling said yesterday that he plans to meet the country’s major banks individually over the next week or two to discuss the shortage of business finance. Darling said that more needs to be done to address the lending freeze. He added that the plunge in property prices appears to be levelling off, and that he wanted banks to aid a recovery through mortgage lending.

Is this just spin or the start of something more?

Earlier in this thread I posted :

Last week in the Home Co. UK HPI 14th July 2009 it said:

......in an unprecedented campaign the Bank of England deputy governor Charlie Bean will commence a tour of the UK to explain why quantitative

easing (creating money to buy government debt) is a good idea to get the UK spending™. The tour follows the BoEs publication of a pamphlet explaining

quantitative easing why it is needed, how it is expected to work and how the MPC are monitoring its effectiveness on the UK economy.

And I also posted above ....

So taking all of that into consideration , will the government put the squeeze on banks to lend for mortgages and continue to support the artificially inflated property market?

Are we in for a winter and spring of continued RAMPING of the market or are we about to finally see HPC resume as EA's and sellers begin to realise that we are not going back to 2007 lending levels or 2007 values any time soon?

In the post above I quoted :

Mr King said: "There is a big difference in practice between the levels of capital banks need to be stabilised... and those required to persuade banks to exhibit normal levels of risk-aversion. How big that gap is is impossible to say... but it looks as if it will be quite big.

The IMF have said the UK cannot afford another fiscal rescue , however, can we afford to print enough money to get banks lending on overvalued properties?

I have read over and over the past few weeks that the CML does not expect lending to exceed the £145billion this year that they predicted at the start of 2009.

The article Even if they Wanted to said :

In 2007, banks made 800,000 mortgage approvals, but only 400,000 were made from their own resources. Banks today are already offering mortgages at an annualised rate of about 375,000 approvals nearly as much as at the peak of the market.

So, how much more can banks realistically do? Perhaps they can lend another 20%, to reach a total of 450,000 mortgages. Add in the struggling building societies at 100,000 loans (a third of their peak) and 20,000 from specialist lenders (down 75%) and the total may be just 570,000 a year.

What does this mean for house prices? History suggests the balance point lies at about 900,000 approvals; below this, prices fall and above it prices rise. So, there may not be enough money in the system to keep house prices rising.

We all know they have wanted to keep property prices high until the next election but CAN THEY? Or are we past the "green shoots" DENIAL stage and heading towards the 2nd stage of HPC ?

Edited by Sybil13
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  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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